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Description

LLC operating agreements may be the most commonly document drafted, reviewed and negotiated by transactional counsel. These documents define the governance, information and liquidation rights of members, allocate economic rewards, sometimes establish restrictions on members or their interests, and can assign or alleviate liability. The tax provisions, too, are highly complex, defining allocations of tax attributes and rights to cash and property distributions.

Fiduciary duties may also be modified in a way that is not possible in other types of entities.

This program provides a practical guide to drafting the most important provisions of LLC operating agreements.

Part 2 topics include:

• Drafting allocation provisions for maximum tax benefit and to secure the safe harbor
• How "payments to member" (not distributions) are treated for financial v. tax purposes
• Drafting ordinary distributions, minimum tax distributions, waterfall distributions, liquidating distributions
• Rights of first refusal, rights of first offer, buy-sell provisions – understanding the alphabet soup of exit alternatives
• Liquidations of the entity and sale of an individual member's interests